Why WeChat adding those much-hated transfer fees was actually genius

You may recall that a few months ago, Tencent decided to add bank transfer fees to its popular WeChat Pay service. Previously, transferring money from your WeChat digital wallet to your bank account had been free, but on March 1 Tencent began imposing a 0.1 percent fee on outgoing transfers.

Users were not amused. Comment threads from stories about the change on March 1 are full of sarcastic comments about how Tencent will never beat Jack Ma and Alipay like this. “Tencent is a shameless company,” reads one comment with dozens of upvotes.

Ostensibly, Tencent CEO Pony Ma’s reason for charging the modest but much-hated fee was to cover the bank transfer fees banks impose upon WeChat. But when the company’s latest financials were revealed this week, another reason for the move came to light: it actually increased WeChat’s total transaction volume.

WeChat is now up to 762 million monthly active users.

When you think about it, it makes a lot of sense. A transfer fee makes you hesitant to transfer money to your bank. But you don’t want to leave it sitting uselessly in your WeChat wallet either. What’s the solution? Use WeChat to pay directly for more of your everyday needs. You can pay for all kinds of things via WeChat, so it’s not likely to complicate your life too much, and it seems to be what WeChat users have done. Transfers to banks may have dropped, but other transactions (like ecommerce purchases and O2O service bookings) have risen.

Of course, it’s tough to say just how strong this effect is, because WeChat’s user numbers have grown, too. It was barely a month ago that the chat app hit 700 million users, but the company’s Q1 financials today say that it’s now up to 762 million monthly active users.